EUR/USD consolidates gains above 1.16, headed for highest daily close in 31 months

The EUR/USD pair leaped to its highest level in nearly 23 months in the first half of the NA session before it started consolidating its earnings. As of writing, the pair, which has been spending the last couple of hours in a tight 15-pip range, is trading at 1.1625, up 0.95%, or 110 pips, on the day.

ECB President Draghi's hawkish remarks coupled with a heavy USD sell-off amid rising political tension in the U.S. fueled the pair's rise on Thursday. 

Following the ECB's decision to keep the interest rates and the monthly pace of QE unchanged, Draghi announced that the policy makers unanimously agreed to put off a formal discussion of QE tapering until the autumn. The shared currency reacted positively to these remarks as investors assessed them as a sign that the ECB wouldn't extend the QE beyond December. During the press conference, one of the reporters asked Draghi if September meeting was the time when they start the debate. Although Draghi didn't give a clear answer to this question, a recent report by Bloomberg claimed that even if the Governing Council starts the debate in September, the bank won't reach a decision on the future of its bond-buying program until October.

• ECB: Changes in communication coming in Sep or Oct - BBVA
• ECB: a call for a September tapering announcement - Nomura

On the other hand, the greenback took another hit on Thursday after news of Special Counsel Robert Mueller's intention to expand his investigation to look at President Donald Trump's business dealings with Russia, which consist of Russian purchases of apartments in a Trump building and the 2013 Miss Universe pageant in Moscow. The US Dollar Index plummeted below the 94 handle for the first time in more than a year and is now at 94.10, losing 0.57% on the day.

• Mueller expands probe to Trump business transactions - Bloomberg

In case the pair stays above the 1.1615 level when the session comes to an end, it's going to record its highest daily close since January 15, 2015. Tomorrow's economic docket seems relatively quiet, and profit-taking could be the only catalyst that could limit further gains in the near-term.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "The technical outlook for the pair is clearly bullish, as the price settled above 1.1615, 2016 yearly high, and consolidate above it on a quiet American afternoon. In the 4 hours chart, the pair is now well above a bullish 20 SMA, whilst technical indicators have lost their upward strength, but remain within bullish territory. Beyond the mentioned daily high, the next bullish target comes at 1.1713, 2015 high."

According to the analyst, resistances for the pair could be seen at 1.1660, 1.1710 and 1.1745 while supports align at 1.1615, 1.1560 and 1.1520. 

• EUR/USD: risk of correction lower is high - Danske Bank